Economic Week In Review | Issue 321 | 21 March 2022
Materials and commodities
Nickel | Following its chaotic price increase, the price of nickel has been under heavy selling pressure which has caused a circuit breaker to halt trade, even after the London Metal Exchange increased the normal 5% circuit breaker to 8%. The exchange has imposed a 15% limit on some other metals.
Aluminium prices increased as Rio Tinto halted shipments of alumina to Russia. The metal has seen a 25% increase in price this year.
Chips | Chipmakers face a further two years of shortages as vital equipment from ASML which etch the circuits into chips, are in short supply. ASML is looking at how to increase its capacity, but it is no small task with its own supply chain extending to 700 product-related suppliers.
UK construction and property news
Confidence | The latest RIBA Future Trends survey found that architects were positive about workloads in February with a third of practices expecting workloads to increase over the next three months (however, it should be noted that the survey took place before the war in Ukraine). London saw a large increase in confidence, rising from +16 to +40, its highest balance in two years.
Infrastructure | In its 2022 progress review, the National Infrastructure Commission has warned the government that it is not on track to meet net zero carbon ambitions by 2050 and is failing in areas including insulation, electric cars, and local transport.
Social value | The Cabinet Office is considering reforming procurement rules to award contracts on value for money rather than “good works” or social value. The move is being considered after the Public Services (Social Value) Act 2012, which was intended to support small businesses, helped to develop an entire industry.
Grenfell | The government has delayed announcing plans for the future of the tower in North Kensington, saying “now is not the right time to take a decision”. Structural engineers have told the government that the tower should not be propped up for much longer, “with deconstruction commencing no later than May 2022”.
Precast foundations | NHBC has approved the use of RBeam, a precast, factory-produced foundation system for low-rise developments.
HS2 | In his six-monthly update to parliament, the minister for transport gave assurance that HS2 “remains in budget and schedule”.
Red diesel | A coalition of 14 construction lobby groups have joined forces to ask for a delay to the removal of the rebate on red diesel. Only agriculture, circuses, golf courses and boatyards will be entitled to use the subsidised fuel after 1st April 2022.
Interest rates | The Bank of England increased interest rates to 0.75% and expects that “some further modest tightening in monetary policy may be appropriate in coming months” but acknowledged that there are “risks on both sides of that judgement depending on how medium-term prospects evolved”.
Inflation | The boss of John Lewis and Waitrose warned that inflation could reach double digits in the UK as supply chain issues worsen. Dame Sharon White also voiced concerns that inflation could be “more enduring” as the cost of energy keeps increasing.
US interest rates | A Federal Reserve official has called for the US central bank to raise its interest rate above 3% this year.
Vix | Also known as the Fear Index, the Vix Index fell by more than 20% in the last week providing an indication that markets are calming.
Germany | Producer prices in Germany maintained their record-breaking rise, increasing nearly 26% year-on-year, largely due to energy prices. Removing the effects of increased energy costs, producer prices rose 12.4%. In its move to reduce reliance on Russian energy, Germany has agreed a long-term gas supply deal with Qatar.
Published every six months, our Tender Price Index is an analysis of inflation price deviation in construction prices. Click on the link above to view our most recent Index.
Friday to Friday
Price / Index
Week % change
Annual % change
$ per £
€ per £
Brent Oil $/barrel
Inflation has become a key concern for many with pockets of high pressure stemming from a disrupted commodity market caused by the war in Ukraine, supply chain pressures as a result of Covid, generally improving markets and demand, or in some cases, knee-jerk reactions to an idea of future supply issues.
In construction. we need to understand these pressures and how they translate construction materials and products, as well as monitoring how they impact confidence and commitment to net zero carbon ambitions.
To look out for this week
The Chancellor will reveal his Spring Budget this week, and many hope that announcements will be made to tackle the cost of living and working, such as energy security, affordability, and efficiency, and a cancellation of the planned increase to National Insurance.
The cookie settings on this website are set to "allow cookies" to give you the best browsing experience possible. If you continue to use this website without changing your cookie settings or you click "Accept" below then you are consenting to this.